Where will innovation take your bank?

This is the first in a series of reports from the 2012 ABA National Conference for Community Bankers. The 2013 ABA conference is set for Orlando, Feb. 17-20.

"It’s not the questions that change, but the answers that do."

—Peter Drucker

Was there a subtle message here? Or was speaker Jeremy Gutsche merely picking up on a meaningful quote?

Gutsche, one of the general session speakers at ABA’s recent National Conference for Community Bankers, is the head of Trend Hunters and author of Exploiting Chaos: 150 Ways to Spark Innovation During Times of Change. The 30-something consultant’s presentation was calculated for shock value, to wake up bankers with a sense of what the world is coming to, in marketing, idea generation, and business delivery.

Yet Gutsche, who held management posts at Capitol One--including that of innovation officer—prior to founding his company, quoted one of the grand-daddies of management consulting. Drucker died in 2005 at 95.

Perhaps the message was the same as that which he wrapped up in various examples he gave in his often frenetic presentation. This concerned the difference between a company doing what it’s always done in new ways, versus doing new things. He and Drucker’s sayings both offer aid to management—in very different ways and means.

For bankers, much of Gutsche’s presentation was a wake-up call that the way the world does things is changing. Case in point, one of Gutsche’s favorite financial institution campaign’s taglines, for ING Direct: "I love love love ING because the big banks make me want to hurl."

"The Holy Grail today is to make a cultural connection," Gutsche advised.

Some of us will have to reach farther than others.

What are you doing? What do you want to do? Remember Smith-Corona? If you are "of a certain age" your bank at some point had its share of Smith-Corona typewriters. And that’s likely how you remember the deceased firm, as a maker of typewriters.

But Gutsche pointed out that Smith-Corona actually introduced an early personal digital assistant and a laptop word processor. Yet the venerable manufacturer went bankrupt in the 1990s.

What happened? Ultimately, Smith-Corona just saw itself as a typewriter company making better and better typewriters. The desktop word processor, multipurpose computers with word processor software, and more not only eclipsed the typewriter, but a substantial number of the traditional secretarial forces that used to pound them.

Gutsche put it bluntly to the audience: Do you want to be a "bank"? Or do you want to make money helping out your customers? Doing the second may mean moving beyond the first.

Exploit the chaos of crisis During the recent financial crisis and the cleanup of the aftermath, there was a widespread tendency to hunker down. Put off new things. Hold off on expenses. Trim the workforce.

Yet many of the companies thriving today did the opposite. Though not cited by Gutsche, the iPad is a good example. The first iPad was launched in 2010--in the midst of the Great Recession.

What a lousy time to launch something that started out as an apparent luxury item, right?

Yet Apple went ahead with a very different idea in computing and changed the industry’s dynamic, at the same time adding to the pace of change in publishing, book sales, magazine and newspaper distribution, and more.

Gutsche’s own example harked back to the Great Depression, also dealing with costly new media. Fortune magazine was launched right in the midst of the Depression. The magazine sold for $1, a high price for a publication back then, even if you had a job.

But Fortune did very well. Why? Gutsche notes that--not unlike the "Occupy" movement of today--many Americans blamed the capitalist system for the nation’s ills. And they felt as if the doors and windows of capitalism were slammed shut, to the general public.

But for a dollar, one could have a glimpse of what was purportedly going on inside, through the new magazine.

Innovation (with one foot on first base) The message of the Smith-Corona and Fortune stories builds to Gutsche’s point that banks need to avoid two things: complacency and fear of failing at a given new effort.

More specifically, he warned that "complacency will be the architect of your downfall." Simply sticking to being the best typewriter company may even be very profitable in the short-term. But someday the typewriter—whatever the current "typewriter" is—will be eclipsed.

Gutsche also warned that "if you don’t fail, you will become the best typewriter company in the world."

Using two mountaintops to make his point, he illustrated that a company that limits its vision and activities to what it knows can only climb to the highest point on its original mountain. And that makes its success a finite quantity.

The company whose opportunities to grow will in turn grow is the firm that looks at the higher mountain next to its original one, and makes the effort to move over.

It is not necessary to put all of the bank’s chips on one strategy. Gutsche pointed out that the BBC maintains many of its traditional functions and programs, but that a while back it started an operation designed to product atypical fare, beyond what people expect from BBC. Thus was born such edgy programming as the original, UK edition of "The Office," said Gutsche.

Prepare for a big shift "New things" are the theme of Gutsche’s Trendhunter website—that is, exploiting trends to produce innovation. Many bankers who visit it will find it shocking, on all kinds of levels. It is eye-opening, to say the least. LINK: www.trendhunter.com/

Hence, one of Gutsche’s final comments:

"Banking has evolved, but marketing has evolved in a completely different direction."